Fake goods: websites selling counterfeit goods blocked

The recent High Court decision in Cartier v B Sky B has confirmed that Internet Service Providers (ISPs) may be ordered to block or impede access to websites selling counterfeit goods. The case highlights the challenges which rightsholders face when tackling trade mark infringement online. Whilst the decision will be welcomed by rightsholders, it is unlikely to lead to a flood of similar applications given the time and costs involved in obtaining these orders.

Background

The case involves six websites ('target websites') all selling counterfeit goods of a particular Richemont brand, eg, www.cartierloveonline.com which sells counterfeit Cartier jewellery. Each of the target websites is directed at UK consumers.

Richemont owned various UK trade mark registrations for the marks CARTIER, MONTBLANC and IWC and sought an order from the court requiring the ISPs to block, or impede, access by its subscribers to the target websites on the basis of trade mark infringement.

The key issues in this test case were whether the High Court had jurisdiction to make blocking orders in the context of trade mark infringement and, if so, whether the orders sought were effective and proportionate.

Did the High Court have jurisdiction to make the orders sought against the ISPs?

The court is able to make similar blocking orders against websites which infringe copyright under section 97A of the Copyright Designs and Patents Act 1988 (CDPA) (which implements Article 8(3) of the InfoSoc Directive). There is, however, no equivalent provision in the field of UK trade mark law, as the UK Government did not pass any legislation to transpose into national law certain provisions of Article 11 of the Enforcement Directive which state that: "Member States shall also ensure that rightsholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right..". This decision was seemingly made on the basis that existing UK law was already in compliance with Article 11.

The judge, Arnold J, decided that the court had jurisdiction to grant the orders sought by Richemont as a matter of both domestic law, by virtue of section 37(1) of the Senior Courts Act 1981 (SCA), and European law, under section 37(1) of the SCA read in accordance with Article 11 of the Enforcement Directive.

If so, were the orders sought proportionate and effective?

Arnold J considered that each of the threshold conditions for granting an injunction was satisfied in this instance, as:

each of the ISPs was an intermediary;

the operators of the target websites were infringing Richemont's trade marks;

the operators of the target websites used the services of the ISPs to infringe the trade marks; and

the ISPs had actual knowledge of this.

Arnold J then considered the various requirements which ought to be met before the blocking orders could be granted and a key issue was whether the form of blocking orders sought by Richemont were proportionate. In assessing this, Arnold J considered the following four factors:

1. Richemont's trade mark rights v the freedom of ISPs to carry on business and internet users to receive information.

Arnold J concluded that the blocking orders would not interfere with the way in which ISPs provided services to their customers. Furthermore, as the ISPs already possessed the requisite technology with which to block websites, no costs would be incurred in acquiring new technology.

The right of internet users to receive information should not be affected if the orders were properly worded and targeted.

2. Were there other options for dealing with online infringement?

The ISPs argued that there were other less burdensome and more effective ways for Richemont to deal with online infringements including:

sending cease and desist letters to the operators of the target websites;

sending takedown notices to the hosts of the target websites;

requesting that payment processors used by the target websites eg, Visa should suspend the operator's merchant accounts;

recovering the domain names of the target websites via dispute resolution procedures or persuading a law enforcement agency such as the Police Intellectual Property Crime Unit to take action to have the domain name cancelled or suspended;

sending notices to search engines requesting that they 'de-index' the target websites; and

tackling imports of counterfeit goods via customs seizures.

Arnold J did not consider that the above options would be as effective in dealing with online infringements as the blocking orders sought by Richemont. One of the key advantages of website blocking was the ability to update the orders to include additional related websites and thereby avoid attempts by the operators of the target websites to circumvent the orders (for example, by switching the target website to a different domain name).

3. The efficacy of the measures which ISPs may have to adopt and whether these will seriously discourage users from accessing the target websites.

Evidence suggested that UK traffic to websites which were subject to blocking orders under section 97A of the CDPA (as a result of copyright infringement) decreased rapidly after the blocking orders were implemented. This led Arnold J to conclude that blocking the target websites should lead to similar results.

4. The costs of implementing the measures.

The ISPs were concerned about the cumulative cost of implementing all potential future website blocking orders, as this would clearly increase the overall cost burden on ISPs. Whilst Arnold J agreed that this was a legitimate concern, he was not prepared to refuse the blocking orders sought by Richemont solely on this basis.

Conclusion

Ultimately Arnold J concluded that the blocking orders sought were proportionate and struck a fair balance between the various rights at issue. Accordingly he agreed to make the orders, subject to the inclusion of a number of additional safeguards to ensure that:

affected subscribers could apply to the court to discharge and vary the orders;

the page displayed to users attempting to access a target website provides details confirming that the target website has been blocked by court order, the name of the party who obtained the order and an explanation stating that affected users have the right to apply to the court to discharge or vary the order; and

the orders contain a 'sunset clause' and so will only last for a certain period (eg, two years), unless the ISPs consent to the orders continuing or the court orders that they should be continued.

In short

This case is good news for rightsholders, as it confirms that blocking orders may be granted to combat online trade mark infringement.

However, the case underlines the huge difficulties which rightsholders face when dealing with infringing websites.

The difficulties and costs involved in obtaining enforcement orders for each infringing website (even if the applications are not opposed) mean that such orders are unlikely to be a panacea for all instances of online infringement.

They will nevertheless be an important part of the armoury employed by rights holders to combat trade mark infringement online.

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